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20201149 Ver 2_Signed MBIDocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 ROY COOPER Governor ELIZABETH S. BISER Secretary S. DANIEL SMITH Director TO: Danny Smith Director NORTH CAROLINA Environmental Quality November 30, 2021 FROM: Katie Merritt l r• v Nutrient Offset Buffer Banking Coordinator THROUGH: Paul Wojoski Supervisor - 401 & Buffer Permitting Branch SUBJECT: Division Approval of the RES 2021 Neuse Umbrella Mitigation Banking Instrument for Riparian Buffer & Nutrient Offset Mitigation Credits pursuant to the Neuse Nutrient Management Strategy for Environmental Banc and Exchange, LLC. The attached final Umbrella Mitigation Banking Instrument (UMBI) between Environmental Banc and Exchange, LLC and the Division of Water Resources was placed on public notice and made available for public comments on November 15, 2021. The public comment period ended on November 29, 2021 and no comments were received on the draft UMBI. DEQ Legal counsel assisted with and agrees with the final template for which all our UMBI documents are drafted from. I have reviewed the attached UMBI and it is ready for your approval. Please sign on page 17 and return the document to me for final execution. 1:tE NORTH CAROLINA Department of Environmental Quality North Carolina Department of Environmental Quality I Division of Water Resources 512 North Salisbury Street 11617 Mail Service Center I Raleigh, North Carolina 27699-1617 919.707.9000 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 AGREEMENT TO ESTABLISH THE RES 2021 NEUSE UMBRELLA MITIGATION BANKING INSTRUMENT IN THE NEUSE RIVER BASIN FOR RIPARIAN BUFFER AND NUTRIENT OFFSET MITIGATION CREDITS PURSUANT TO THE NEUSE NUTRIENT MANAGEMENT STRATEGY TABLE OF CONTENTS I. PREAMBLE 2 II. LOCATION AND GEOGRAPHIC SERVICE AREA 2 ❑I. AUTHORITIES 3 IV. ESTABLISHMENT OF BANK PARCELS 3 V. PRE -CONSTRUCTION DOCUMENTATION 5 VI. POST CONSTRUCTION DOCUMENTATION FOR EACH BANK PARCEL 7 VII. CALCULATION OF CREDITS 10 VIII. CREDIT RELEASE SCHEDULE 12 IX. PROCEDURE FOR DEBITING AND CREDITING MITIGATION CREDITS 13 X. BANK PARCEL CLOSURE 15 XI. GENERAL PROVISIONS FOR EACH BANK PARCEL 15 ATTACHMENTS A - Division of Water Resources Authority Document B - Ledger Templates C — Project Credit Table (example) References 1. Nutrient Offset Credit Trading Rule: http://reports.oah.state.nc.us/ncac/title%2015a%20 %20environmenta1%20quality/chapter'%2002%20- %2 0 env ironm enta l%n 2 0 m ana gement/subchapter%20b/ 15 a %20nca c%2 002 b%20.0 703 .pd f 2. Riparian Buffer Mitigation Rule: littp ://repo rts. oah. state. nc . us/nc ac/title %o2 015 a%2 0 %2 0e nv iro iune nta l%2 0qua li ty lc ha pter%2 0 02 %20- %a20env ironmental%20management/subchapter%20b/ 15a%20ncac%2002b%20.0295. pdf 3. NC Session Law 2019-86 "Nutrient Offset Credits": https://www .nc leg. gov/S essions/2019B i l ls/Ho use/PDF/H 812 v 3 .pdf 4. Buffer Interpretation/ Clarification # 2008- 019 for diffuse flow: https://files.nc.gov/ncdeq/Water%200uality/Surface%20Water%20Protection/401 Buffer%20Clarification %20Mernos/Diffuse-Flow-for-Buffer-Mitigation-Sites-Buffer-Clari ficat ion -Me tno-20080819.pdf 5. CIarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits (November 2019): https://files.nc.gov/ncdeq/W ater%20Qual ity/Surface%20 Water%20Protection/401 /Mit igationtlssues--- Re so lut io ns-V e r-1.0-b a ffe r-u2 it igati on-nutrient-o ffs e t .pd f 6. NCDWR — Methodology and Calculations for Nutrient Reduction on the Bank Parcel: https://fi lcs.nc. gov/ncdeq/Water%200uality/P lanning/NPU/Nutrient%200ffsel%20Rule/Ag-Buffcr- Credit.pdf 1 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 I. PREAMBLE This RES 2021 Neuse Umbrella Mitigation Banking Instrument ("Instrument") regarding the establishment, use, operation, and maintenance of the Wolf King Bank Parcel and Shady Grove Bank Parcel (Bank Parcels), identified in Section II, to provide Neuse Riparian Buffer mitigation credits ("Riparian Buffer Credits") and Neuse Nutrient Strategy nutrient load reduction credit ("Nutrient Offset Credits") is made and entered into by and among Environmental Banc and Exchange, LLC acting as the Bank Sponsor ("Sponsor"), and the North Carolina Department of Environmental Quality — Division of Water Resources ("DWR"). This Instrument is in accordance with 15A NCAC 02B .0703 and the Consolidated Mitigation Rule 15A NCAC 02B .0295, which became effective on April 1, 2020 and November 1, 2015 (References 1 and 2) respectively. This instrument is for two individual bank sites, Wolf King and Shady Grove. The purpose of the Bank Parcels are: A. To restore and preserve riparian vegetation adjacent to streams and/or agricultural ditches with the intent to improve water quality, reduce nutrient loads, enhance flood attenuation, and restore wildlife habitat within the Neuse River Basin (8-digit HC 03020201), excluding the Falls Lake Watershed. B. To convert agricultural land uses within riparian areas adjacent to streams and/or agricultural ditches into a dense and diverse, hardwood vegetated state with the intent to significantly reduce nutrient loadings associated with agricultural practices into streams and ditches. C. To provide buffer mitigation and nutrient offsets and sell any resulting Riparian Buffer Credits and/or Nutrient Offset Credits to third parties in the Neuse River Basin, for development (both existing and proposed) or to offset NPDES- permitted wastewater nutrient sources requiring such mitigation or offset. II. LOCATION AND GEOGRAPHIC SERVICE AREA A. The Geographic Service Area ("GSA") is the designated area wherein a Bank can reasonably be expected to sell Riparian Buffer Credits and/or Nutrient Offset Credits for impacts due to development activities. B. The GSA for the Bank Parcels under this instrument is limited to the United States Geological Survey ("USGS") 8-digit Hydrologic Unit Code ("HUC") 03020201 of the Neuse River Basin, excluding the Falls Lake Watershed in the State of North Carolina. C. Sale or transfer of Riparian Buffer Credits shall be limited to the 8-digit HUC 03020201 in the Neuse River Basin, excluding the Falls Lake Watershed, unless otherwise authorized by the DWR or delegated Iocal government in accordance with 15A NCAC 02B .0295. 2 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 D. Sale or transfer of Nutrient Offset Credits shall be limited to 8-digit HUC 03020201 in the Neuse River Basin, excluding the Falls Lake Watershed, in accordance with 15A NCAC 02B .0703, unless otherwise authorized by the DWR in accordance with Session Law (S. L.) 2019-86. E. The following table provides site -specific details of each of the two Bank Parcels proposed under this Instrument, all are within the Neuse River Basin (8-digit HUC 03020201); Table 1.t1 Project Information Bank Parcel Name County 8-Digit USGS Hydrologic []nit Code DWR Project # Project Location Named Receiving Stream Primary Land Usels Wolf King Wayne 03020201 2020 1149 v2 35.307000, -78.167000 Horse Creek Agricultural Fields Shady Grove Wayne 03020201 20201091 v2 35.219357, _781 1 1898 Thunder Swamp Agricultural fields, mature natural forest III.AUTHORITIES A. The Banks will be used to provide Riparian Buffer Credit and Nutrient Offset Credit in accordance with the requirements in the DWR Authority document referenced herein as "Attachment A" and attached to this Instrument. B. Projects eligible for utilization of the credits are those requiring authorization under the requirements of Attachment A and any new approved North Carolina ("State") statutes and rules for the Neuse Nutrient Sensitive Waters Management Strategy. C. The selling of credits generated from the Bank Parcels approved under this Instrument, shall be consistent with approved State statutes and rules for the Neuse Nutrient Sensitive Waters Management Strategy. D. Buffer Mitigation and nutrient offset activities proposed under this Instrument and corresponding Bank Parcel Development Packages (BPDP) to generate Riparian Buffer Credits and Nutrient Offset Credits shall be consistent with North Carolina ("State") statutes and rules for the Neuse Nutrient Sensitive Waters Management Strategy that are in place at the time a complete BPDP is submitted to DWR. IV. ESTABLISHMENT OF BANK PARCELS A. In accordance with 15A NCAC 028 .0295 and 15A NCAC 02B .0703, DWR has provided a "Site Viability Letter" for each of the Bank Parcels proposed under this Instrument. The site viability letter is not an approval of the site to generate Riparian Buffer Credits and Nutrient Offset Credits, but is a preliminary review of the Bank Parcel that details and confirms existing land -use conditions, defines the riparian zone sites (Enhancement, 3 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 Preservation, or Restoration), and identifies features (streams, ditches, ponds, etc.) that meet general criteria to be suitable to generate Riparian Buffer Credits and Nutrient Offset Credits. Table 2.0 below outlines when a Site Viability Letter was issued by DWR for the mitigation sites proposed under this Instrument: Table 2.41— Site Viability Letter Details Bank Parcel/DWR Project # NC DWR Site Visit Viability Letter ReceivedViability Letter Expiration Date Wolf King September 23, 2020 Febnuary 22, 2021 February 22, 2023 Shady Grove September 23, 2020 March 3rd, 2021 March 3, 2023 B. A valid Site Viability Letter is required prior to submittal of each BPDP. Site Viability Letters will either expire upon the submittal of a BPDP to the DWR or on the dates listed in the table above, whichever comes first. If a Site Viability Letter expires prior to submittal of a complete BPDP as described in Section V to DWR, then the Sponsor must submit a formal request to DWR for a new Site Viability Letter for that Bank Parcel. C. The Bank Parcels proposed for inclusion under this Instrument shall each require a BPDP be submitted to, and approved by, the DWR prior to use of the individual Bank Parcel for buffer mitigation and nutrient offset purposes or for any sale or transfer of any associated credits. The contents of the BPDP are provided in Section V. D. Each BPDP submitted under this instrument will be placed on public notice and made available for public commenting for 15 calendar days. E. In general Riparian Buffer Credit on these Bank Parcels may be achieved through restoration and preservation of DWR riparian buffers as they are defined in 1SA NCAC 02B .0714, and other riparian areas allowed per 15A NCAC 02B .0295 (n) and (o) where applicable. Riparian Buffer Credits are only attainable if the width of the riparian areas are at least 20 feet from tops of banks along streams and 30 feet from tops of banks along viable ditches when measuring perpendicular and landward from features. Riparian buffer credits are attainable to a maximum of 200 feet from tops of banks of streams and a maximum of 50 feet from the tops of banks of viable ditches. The viability of features to generate riparian buffer credits is provided in the Site Viability Letters for the Bank Parcels and referenced in Table 2.0 of this instrument. F. The Bank Parcels are intended to provide Neuse Riparian Buffer Mitigation Credits as follows: 1. Planting hardwood trees on a Restoration Site as defined in 15A NCAC 02B .0295(b) adjacent to viable streams and viable ditches. 2. Maintaining a Preservation Site as defined in 15A NCAC 02B .0295(b) by placing a conservation easement around riparian areas along viable streams as allowed per 15A NCAC 02B .0295 (o). 4 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 Diffused flow will be maintained onsite to the maximum extent practicable. The Buffer Interpretation/Clarification Memo #2008-019 may be applied where maintenance of diffuse flow onsite is unattainable. G. Nutrient Offset Credit may be achieved on these Bank Parcels through restoration of the riparian areas adjacent to viable streams and viable ditches, where agriculture was determined by DWR to be the predominant land use. The width of the riparian restoration area will begin at the most landward limit of the top of bank or the rooted herbaceous vegetation of streams and ditches and extend landward a minimum of 50 feet and a maximum of 200 feet on all sides of the features. A conservation easement will be secured to include the tops of all channel and ditch banks and will extend out a maximum of 200 feet from the streams and viable ditches. The viability of features to generate nutrient offset credit is provided in the Site Viability Letters for the Bank Parcels and referenced in Table 2.0 of this Instrument. H. The Bank Parcels are expected to provide Nutrient Offset Credits as follows: 1. Converting agricultural land uses within riparian areas to non-agricultural land uses by placing a perpetual conservation easement around riparian areas along viable streams and viable ditches in accordance with 15A NCAC 02B .0703 (g).. 2. Planting hardwood trees and shrubs on a Restoration Site as defined in l 5A NCAC 02B .0295 (h) adjacent to viable streams and viable ditches where agriculture has been determined by DWR to be the predominant land -use. I. Both of the Bank Parcels submitted for review under this Instrument are anticipated to begin construction of buffer activities in Spring 2022. The total area of riparian restoration activities on the Wolf King Bank Parcel is expected to be 8.75 acres and 19.43 acres on the Shady Grove Bank Parcel. V. PRE -CONSTRUCTION DOCUMENTATION Bank Parcel Development Package A. All BPDPs submitted under this Instrument shall be submitted to DWR for review and must be approved by DWR prior to any construction on the Bank Parcel. The BPDP must describe any changes that have occurred to the site between the date of the Site Viability Letter and the date the BPDP is submitted to DWR. The BPDP shall include detailed information consistent with the sections below concerning; 1) site location (8-digit HUC is required); 2) existing conditions with current photos; 3) proposed buffer mitigation and nutrient offset activities including a detailed vegetation plan; 4) monitoring and maintenance plans; 5) financial assurances; 6) A Project Credit Table (see Attachment C) showing associated buffer mitigation/nutrient credit calculations, which shall include credit generation, service area, and accounting as appropriate for each regulatory authority; 7) stream buffer determination letter from DWR, and 8) Site Viability Letter from DWR; 9) service area figure for each mitigation type proposed under this instrument; and 10) all pertinent information including but not limited to permitting, bank stabilization, culvert 5 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 removal, installation of any utilities indirectly or directly affecting the Bank Parcel, endangered or threatened species, presence of historical sites and an Environmental Data Resources (EDR) report to evaluate environmental risk associated with the land proposed for the Bank . B. The Sponsor will obtain all applicable federal, state, and local documentation, permits, or authorizations needed to construct and maintain the Bank Parcel. This Instrument does not qualify as, or substitute for, such documentation, permit, or authorization. C. Any restoration and/or enhancement activities or proposed construction within stream channels, the riparian buffers and other riparian areas on the Bank Parcels to produce Riparian Buffer Credit or Nutrient Offset Credit must be approved by DWR in writing prior to implementation. The failure of the Sponsor to comply with this requirement may result in a revised or reduced credit release schedule for that specific mitigation site. D. Requests for deviation from the approved BPDP must be submitted to DWR in writing. Written approval from the DWR must be received prior to implementing any deviation from the approved BPDP. Property Disposition & Long Term Management E. Prior to the release of any credits, the Sponsor shall record permanent conservation easements at the Wayne County Register of Deed's office that is sufficient to ensure protection, operation and maintenance of restored riparian buffers and other riparian areas for the duration specified in the approved BPDP. F. The form of the conservation easement shall be consistent with the standards employed by the State of North Carolina in the protection of restored riparian buffers and riparian areas and shall be approved by the DWR prior to the release of any credits. G. The Sponsor shall not grant additional easements, right of ways, or any other property interest in or to the project areas, without prior approval from the DWR. H. The Sponsor agrees to assign the conservation easement and its interests in perpetuity to a qualified holder under NC General Statute ("GS") 121-34 et seq. and 170(h) of the Internal Revenue Code prior to the submittal of the Year 4 Monitoring Report. The holder shall be a land trust or stewardship program that will hold and enforce the conservation easement and the interests in perpetuity. The Sponsor shall choose a land trust or stewardship program that is accredited by the Land Trust Accreditation Commission and/or has been approved by DWR prior to the end of the fourth year monitoring period. A land trust must be certified under 501 (c)(3) of the Internal Revenue Code. I. In the event the Sponsor is also the owner of the underlying fee interest in the property, the conveyance of the conservation easement to a land tnist or stewardship fund must be arranged at the outset of the approved BPDP. 6 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 Financial Assurances for Bank Parcel Development J. Following approval of the BPDP for each Bank Parcel, the Sponsor shall provide Performance/Maintenance Bonds from a surety company that is rated no less than an "A-" as rated by A.M. Best, to construct the sites according to the approved BPDPs. It is the Sponsor's responsibility to confirm that the surety company is rated no less than an "A-" with each annual bond renewal. K. The amount of each Performance Bond shall be 100% of the estimated cost for implementation of the riparian restoration, enhancement, preservation and other related activities for the construction of the Bank Parcels as described in the approved BPDPs. No bond shall be less than $150,000.00 to cover construction costs. L. Alternatively, in lieu of posting Performance Bonds, the Sponsor may elect to construct the Bank Parcel prior to the first credit releases. M. For each Bank Parcel, once DWR has released all credits for completion of all items listed below, then the Bank Sponsor will be released from its performance obligations under the performance bond required in Item .1 and K of this section: 1. Instrument and BPDP Approved by DWR, Conservation Easement Recorded, Financial Assurance Posted; 2. Mitigation Site Earthwork and Planting and Installation of Monitoring Devices Completed; 3. As -Built Report as described in Section VI has been received by DWR; and 4. DWR has submitted a written approval of the As -Built Report N. To comply with this section, DWR must be the Obligee on all performance bonds. VI. POST CONSTRUCTION DOCUMENTATION FOR EACH BANK PARCEL As -Built Report A. The Sponsor agrees to perform all necessary work, in accordance with the provisions of this Instrument and corresponding BPDP, to establish, maintain, and monitor Neuse Riparian Buffers or other riparian areas until Item B (1) and (2) of Section X have been satisfied. B. Within 30 calendar days after completing the establishment of the buffer mitigation and nutrient offset areas, the Sponsor will submit written notification to DWR documenting that all buffer mitigation and nutrient offset activities have been completed. Failure to submit written notification within 30 days may result in a modified credit release schedule or a delay in the issuance of credit releases. Notification shall include all the following: 1. Short summary of activities completed as required per the approved BPDP; 7 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 2. Figures representing all riparian restoration, riparian enhancement and riparian preservation activities where applicable; 3. Figures representing location of all monitoring plots installed; 4. Detailed planting plan- including type of species planted, density of species planted, and any modifications to the planting plan from what was approved in the BPDP; 5. Description of how the conservation easement boundaries were marked; and b. Any major changes to the conservation easement boundary or to the amount of Riparian Buffer Credits and/or Nutrient Offset Credits from what was proposed in the approved BPDP C. The Sponsor will submit an as -built plan and report for the Bank Parcel after completing the establishment of the buffer and nutrient offset mitigation areas. The as -built report will describe any deviation from the approved BPDP and will document the following: 1. Riparian restoration and enhancement planting details and other construction activities that were required in the BPDP, confirmation that all boundary markers are installed, invasive species control, monitoring device locations, vegetation plot locations, and photo point locations. 2. Boundary Survey of the conservation easement area, signed and sealed by a licensed surveyor, including an inventory of the final mitigation areas for Riparian Buffer Credits and/or Nutrient Offset Credits in both square feet and acres. 3. As -built map of the buffer mitigation and nutrient offset areas showing where riparian restoration, enhancement and preservation was performed and any deviations to the Bank Parcel from what was approved in the BPDP. 4. Aerial map of the buffer mitigation and nutrient areas that was included in the approved BPDP. Financial Assurance for Monitoring and Maintenance D. After completion of the riparian restoration and mitigation activities construction on each Bank Parcel, a separate Performance/Maintenance Bond will be secured for 100% of the estimated cost to implement the monitoring and maintenance plan as described in the approved BPDP and As -Built Report applicable for each site. The Bond must be from a surety company that is rated no less than an "A-" as rated by A.M. Best, and it is the Sponsor's responsibility to confirm that the surety company is rated no less than an "A-" with annual bond renewals. E. A Performance/Maintenance Bond shall be secured each year for a minimum of five years, and until DWR has released all Riparian Buffer Credits and Nutrient Offset Credits to the Bank Sponsor. Upon receiving a credit release letter from DWR approving a monitoring report with no contingencies, the bond may be lowered for that next year's monitoring based on the adjusted cost to complete the monitoring. No bond shall be less than $100,000 initially, to cover monitoring and maintenance costs. 8 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 F. For each Bank Parcel, once DWR has released 100% of all credits for completion of all Bank Parcel milestones described in Table 3 of Section VIII and in the corresponding BPDP, the Bank Sponsor will be released from its performance obligations under the performance bond required in "C-D" of this Section. G. To comply with this section, DWR must be the Obligee on all performance bonds. Monitoring and Maintenance Reports H. The Sponsor shall monitor the Bank Parcel as described in the BPDP until such time as DWR determines that the performance standards described below have been met. The monitoring period shall be a minimum of five consecutive years for each Bank Parcel. I. Performance Standards for Vegetation: Native hardwood trees or native hardwood tree and shrub species should be planted at a density sufficient to provide 260 stems per acre after five years. A minimum of four (4) native hardwood trees or four (4) native hardwood tree and shrub species must be planted. No one species shall be greater than 50% of the planted stems. A list of species for planting will be detailed in the BPDP for approval. Native hardwood tree volunteer species may be included to meet performance standards as determined by the DWR. J. A "stem" means a woody seedling, sapling, shrub or tree, no less than 10 centimeters in height and shall apply, on the Bank Parcels, to the minimum height that a planted tree or shrub shall be at initial planting. Volunteer stems that are less than 10 centimeters shall not be quantified and included in the annual vegetation data included with the monitoring reports. K. If the performance standards of the vegetation are not met, supplemental plantings maybe required. Supplemental plantings will be utilized until the required densities have been achieved and maintained for five years. Bank Parcel maintenance, such as ensuring diffuse flow, managing invasive species, and pest control will be included in the BPDP. L. Monitoring Reports for Riparian Buffer Credit and Nutrient Offset Credit: Reporting criteria of the vegetation shall be based on the Carolina Vegetation Survey (CVS) — EEP Protocol for Recording Vegetation Level 2 Plot Sampling only version 4.0 or any updated versions of this protocol in place on the date of acceptance of the BPDP. The Sponsor shall submit to the DWR an annual monitoring report no later than December 31 of each year for a minimum of five consecutive years after the first full growing season for each Bank Parcel under this instrument. Vegetation data shall not be collected prior to late August of each year. This report will describe the conditions of each Bank Parcel, including an evaluation of the performance standards of the vegetation contained within the approved BPDP. Reports shall contain the following: 1. A U.S. Geological Survey map showing location of the Bank Parcel; 9 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 2. A detailed narrative with supporting photos summarizing the condition of the Bank Parcel along with any maintenance or remediation performed that year, and 3. A map, survey, or other figure showing locations of sampling plots, permanent photo points, location of transects, etc.; and 4. Monitoring data, including specific vegetative counts and height data showing that the trees or tree and shrub species planted are meeting performance standards and updated photographs; and 5. A copy of the most recent Bank credit/debit ledgers; and 6. Corresponding veri fication letters from designated local governments upon request; and 7. Corresponding Mitigation Transfer Certificates upon request; and 8. Proof of performance bond renewal to cover the next monitoring year (if applicable) Contingency Plans/Remedial Actions M. In the event the Bank Parcel fails to achieve the performance criteria described in this Instrument and the approved BPDP, the Bank Sponsor shall develop necessary contingency plans in coordination with the DWR and implement appropriate remedial actions for the Bank Parcel and the Bank. Depending on the degree of remedial actions required, the DWR may modify the monitoring period. VII. CALCULATION OF CREDITS Riparian Buffer Credits A. All Riparian Buffer Credits shall be determined based on the ratios and percentages provided in 15A NCAC 02B .0295 (m) and (n) following the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR, see reference #5, including the most recent Project Credit Table Template provided online (see Appendix C). B. Riparian buffer restoration on each of the Bank Parcels, as described in 15A NCAC 02B .0295 (n), and defined in 15 A NCAC 02B .0295 (b) that is performed on agriculture lands within the Bank Parcels, may be used for either Riparian Buffer Credit or Nutrient Offset Credit, but not both. C. Riparian buffer preservation on the Bank Parcel, as described in 15A NCAC 02B .0295 (o) and defined in 15A NCAC 02B .0295 (b), can only be used for Riparian Buffer Credit. D. Riparian Buffer Credit is defined as one (1) buffer credit per one square foot or 43,560 buffer credits per one acre. Nutrient Offset Credits 10 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 E. The square footage of Nutrient Offset Credits on both of the Bank Parcels submitted under this instrument will be determined by applying the applicable ratio as provided in 15A NCAC 02B .0295 (m) for a Restoration Site and Enhancement Site following the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offiet Credits issued by the DWR, including the most recent Project Credit Table Template provided online by DWR, see reference # 5 and Attachment C. All riparian areas proposed for Nutrient Offset Credits must be a minimum of 50 feet from the top of the stream or ditch banks on land noted in a Site Viability Letter as agriculture. F. Nutrient Offset Credits cannot be achieved through the preservation activities performed on this Bank Parcel. G. Nutrient Abatement of Restored Riparian Area/Buffers on agricultural land: The Sponsor and DWR agree to the following: 1. The pounds of nitrogen offset per acre of restored riparian areas/buffers shall be 2,273.02 pounds per acre or 19.16394 square feet per pound. H. The Sponsor and DWR agree the methodology and calculations for determining nitrogen reduction, associated with restoration and enhancement of riparian areas on these Bank Parcels as described in Section IV of this Instrument, shall be fixed as part of the approval of this Instrument, with the fixed amount not changing during the Bank Parcel Development or credit release schedule for each Bank Parcel unless the viability letter for that Bank Parcel has expired. For further details on the approved method and calculations for determining nutrient reductions associated with the riparian restoration on this Bank Parcel refer to the NCDWR - Methodology & Calculations for Nutrient Reductions document found in reference #6. This space left blank intentionally, do not add text to this space. 11 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 VIII. CREDIT RELEASE SCHEDULE A. Upon submittal of all appropriate documentation by the Sponsor, and subsequent approval by DWR, it is agreed that the Riparian Buffer Credits and Nutrient Offset Credits associated with each individual Bank Parcel will become available for sale to a third party in accordance with Credit Release Schedule in Table 3.0 below. Table 3.0 - Credit Release Schedule for Riparian Buffer and Nutrient Offset Credits Task Project Milestone % Credit Available for Sale 1 Instrument and BPDP Approved by DWR, Conservation Easement Recorded* and Financial Assurance Posted 20 2 All Riparian Earthwork & Mitigation Activities, Planting and Installation of Monitoring Devices completed, easement boundaries adequately marked, all applicable permits obtained, site visit perfonned by DWR 20 3 Monitoring Financial Assurance Posted and Approval of As -Built Report I0 4 Monitoring Report # 1: Approved by the DWR** & Financial Assurance Posted 10 5 Monitoring Report #2: Approved by the DWR** & Financial Assurance Posted 10 6 Monitoring Report #3: Approved by the DWR** & Financial Assurance Posted 10 7 Item B (1) of Section X in this Instrutnent has been completed and approved by DWR. 5 No remaining credits will be released until the conservation easement has been assigned to an approved land trust or stewardship 8 Monitoring Report #4: Approved by the DWR** & Financial Assurance Posted 5 9 Monitoring Report #5: Approved by the DWR** and final site visit by DWR has been conducted 10 Total 109°/a For specification, please see Section V m this Instrument DWR Approval provided upon a determination that the site is meeting success criteria contained within the approv-cd I3PDP B. DWR may modify credit release schedules based on the information submitted or the order in which required information is received. DWR will notify the Sponsor of any modification to the credit release schedule. Any major deviations to the Bank Parcel that were not authorized in writing by DWR prior to implementation may affect the amount of riparian buffer credits and nutrient offset credits that will be generated by the Bank Parcels 12 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 IX. PROCEDURE FOR DEBITING AND CREDITING MITIGATION CREDITS Credit Ledgers A. The Bank Sponsor shall maintain a credit ledger for each mitigation type for each Bank Parcel under this Instrument: Credit ledgers shall provide the accounting for Riparian Buffer Credits in square feet and acres, and Nutrient Offset Credits in pounds and square feet_ B. Each credit ledger shall be submitted on a separate 8 'V2 in. x 11 in. spreadsheet with legible font style and font size. All ledgers shall be submitted using the templates provided in Attachments B of this Instrument or any updated versions to these templates as provided by DWR. Credit Processing C. Credits must be calculated for the Bank Parcel using the most recent Project Credit Table template (see attachment C) which is referenced in the guidance provided in the Clarified Procedures far Calculating buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR, see reference #5. D. Riparian Buffer Credits generated on these Bank Parcels will be used to provide mitigation for authorized buffer impacts within the 03020201 HUC of the Neuse River Basin according to 15A NCAC 02B .0295 (f) and (g), excluding the Falls Lake Watershed. E. Nutrient Offset Credits generated on these Bank Parcels will be used to offset nitrogen nutrient loads within the 03020201 HUC of the Neuse River Basin, excluding Falls Lake Watershed, in accordance with 15A NCAC 02B .0703. F. Available Riparian Buffer Credits (credits that have been released by DWR but not sold by the Sponsor) that are generated from riparian restoration on agriculture land and meet criteria for nutrient offset credits as depicted in the Project Credit Table in the approved BPDP or approved As -Built Report, whichever applies at the time of the request, can be converted from Riparian Buffer Credits into Nutrient Offset Credits upon written approval from DWR. Once a credit has been converted to another credit type, the transaction is permanent and the credit cannot be converted again. G. Available Nutrient Offset Credits (credits that have been released by DWR but not sold by the Sponsor) that are generated from riparian restoration within 0- 100' from tops of stream banks and meet criteria for riparian buffer credits as depicted in the Project Credit Table in the approved BPDP or approved As -Built Report, whichever applies at the time of the request, can be converted from Nutrient Offset Credits to Riparian Buffer Credits upon written approval from DWR. Once a credit has been converted to another credit type, the transaction is permanent and the credit cannot be converted again. 13 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 H. Riparian Buffer Preservation credits generated on these Bank Parcels are not transferrable into nutrient offset credits. I. Any Credit conversions must be calculated using the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR, see reference #5. J. The Bank Sponsor shall obtain written verification of nutrient offset need from a designated local government in the 03020201 HUC of the Neuse River Basin outside of the Falls Watershed, or from DWR through an approved NPDES permit for wastewater nutrient sources prior to debiting Nutrient Offset Credits from the Bank Parcel. K. The Bank Sponsor shall obtain verification of buffer mitigation required from the delegated local government in the 03020201 HUC of the Neuse River Basin outside of the Falls Watershed or DWR prior to debiting Riparian Buffer Credits from the individual Bank Parcel. L. All credit and debit transactions for each Bank Parcel under this Instrument shall be accurately depicted in the credit ledgers. The Bank Sponsor shall provide DWR up-to-date credit ledgers for each Bank Parcel by the tenth (10th) of each month. At a minimum and upon request DWR shall receive a hard copy of updated credit ledgers along with the corresponding Mitigation Credit Transfer Certificates ("Certificate") and all corresponding letters from the designated local governments or DWR where applicable, once a year. Notification of all credit sales shall be provided to DWR until all credits that have been released have been sold. Mitigation Credit Transfer Certificates M. All credit sales will include a Mitigation Credit Transfer Certificate ("Certificate") that is required to be provided to the buyer of Riparian Buffer and/or Nutrient Offset credits, that will include, at a minimum, the following information: 1. Bank Details: (1) sponsor, (2) bank parcel as it appears in this Instrument, (3) DWR project number for the BPDP as it appears in Table 1.0. 2. Credit Details: (1) date of receipt, (2) identify if full or partial payment, (3 — when applicable) amount of Nutrient Offset Credits purchased in pounds and confirmation from the designated local government of the amount required, and (4 — when applicable) amount of Riparian Buffer Credits purchased in square feet and the confirmation from DWR or the local government of the amount required. 3. Permitted Project Details: (1) project name as it appears on DWR or local government permits and/or certifications, (2) 8-digit HUC, (3) river basin, (4) nutrient strategy applicable to the project, (5 — when applicable) designated local government requiring Nutrient Offset Credits, and/or (6) DWR authorization 14 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 number or delegated local government requiring Riparian Buffer Credits for this project. C. If the DWR determines that the Bank is operating at a deficit (e.g. the Sponsor is closing on sales and/or transferring credit that is not available), or the Bank is selling credits out of compliance with statutes, rules or this Agreement, the sale/transfer of credits will immediately cease, and the DWR, in consultation with the Sponsor, will determine what remedial actions are necessary. X. BANK PARCEL CLOSURE A. Bank Parcel Closure for each Bank Parcel under this Instrument shall be identified as the event when the Sponsor is relieved of all of its responsibilities to the Bank Parcel and there are no Riparian Buffer Credits or Nutrient Offset Credits left to sell. B. Bank Parcel Closure shall commence only after all following events have occurred: I. Transfer or assign the conservation easement and all of its interests, in perpetuity, to a land trust or stewardship program as described in Section V of this Instrument. 2. All five years of monitoring completed and all monitoring reports submitted and approved by DWR. 3. All credits have been released and debited and updated ledgers showing zero credit balances have been submitted and approved by DWR. XI. GENERAL PROVISIONS FOR EACH BANK PARCEL A. Upon the presentation of proper credentials, and during normal business hours, the Sponsor and the landowner shall grant permission to the Director of DWR, or an authorized representative of the Director of DWR, to enter the property containing the Bank Parcels). B. Amendments: This Banking Instrument may be amended or modified only with written approval of all signatory parties. C. Any transfer of the Sponsor's rights or obligations outlined in this Instrument or any other agreement referenced in this Instrument to a third party must be approved by DWR prior to the transfer. D. Force Majeure: After 100% of all of the credits have been released according to the credit release schedule in the BPDP and confirmation has been received by the DWR that the Conservation Easement has been successfully assigned in compliance with Item H of Section V, the Sponsor will not be responsible for Bank failure that is attributed to natural catastrophes including but not limited to flood, drought, disease, regional pest infestation, etc. that are beyond the control of the Sponsor. 15 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 E. However, if an event occurs before 100% of all of the credits have been released according to the credit release schedule in Section V111, the Sponsor shall take remedial action to restore the property to its condition prior to the event, in a manner sufficient to provide adequate mitigation to cover credits that were sold prior to the occurrence of the event. Such remedial action shall be taken by the Sponsor only to the extent necessary and appropriate, as determined by DWR and the Sponsor. DWR must concur in writing that a force majeure event has occurred for this provision to apply. F. Oversight: Actions taken by DWR may include, but are not limited to, the following: 1. Site visits, 2. Issuance of Site Viability Letters, 3. BPDP review and approval of items listed in Section V of this Instrument, 4. As -Built Report review and approval of items listed in Section VI of this Instrument, 5. Monitoring Report review and approval of items listed in Section VI of this Instrument, 6. Credit Ledger review and approval of items listed in Section IX of this Instrument, 7. Certificate review of items listed in Section IX of this Instrument and cross analysis to credit ledgers and, 8. Information requests, file reviews and audits Reports, ledgers, files and other information shall be made available to DWR upon request, unless otherwise specified in this or any other document. G. Validity of the Banking Instrument: This Instrument will become valid on the date of the last parry's signature. H. Specific Language of Banking Instrument Shall Be Controlling: To the extent that specific language in this document changes, modifies, or deletes terms and conditions contained in those documents that are incorporated into the Instrument by reference, and that are not legally binding, the specific language within the Instrument shall be controlling. I. Any disputes over decisions regarding this Instrument, shall be referred to the Director of DWR for a decision. The Director's decision is subject to review as provided in Articles 3 and 4 of G.S. 150B. J. This Agreement shall be binding upon the parties and is entered into knowingly, intelligently, and voluntarily. 16 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 K. Notices: All notices and other communications which may be or are required to be given or made by any party to the other shall be in writing and shall be deemed to have been properly given and received on the date delivered in person or deposited in the United States mail, registered or certified, return receipt requested, to the addresses set out below, or at such other addresses as specified by written notice delivered in accordance herewith. If to Bank Sponsor: If to DWR: Environmental Banc and Exchange, LLC Attention: Mr. Daniel Ramsay 3600 Glenwood Avenue, Suite 100 Raleigh, North Carolina 27612 dramsay(cc?res.us NC Division of Water Resources — 401 & Buffer Permitting Branch Attn: Nutrient Offset and Buffer Banking Coordinator 1617 Mail Service Center Raleigh, NC 27699-1617 L. Applicable Law: This Agreement shall be construed under the laws of the State of North Carolina. Environmental Banc and Exchange, LLC By: Daniel Ramsay (Print) (Signature) Title: Date: l a 72 General Manager November 12, 2021 NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY - DIVISION OF WATER RESOURCES Danny smith By: (Print) p-DocuSigned by: Title: Date: V ki SK4 ugt, (Signature) \--98F7A67B5CCA425... Director, Division of Water Resources 11/30/2021 17 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 Nutrient Offset Program & Buffer Mitigation Program Authorities for Neuse Strategy MBI ATTACHMENT A Authorities pertaining to the RES 2021 Neuse Umbrella Mitigation Banking Instrument All Basins General Statutes: G.S. §143-214.11 Ecosystem Enhancement Program G.S. §143-214.26 Nutrient Offset Credits G.S. §143-214.20-24 Riparian Buffer Protection Program G.S. § 143-214.7 Stormwater runoff rules and programs G.S. §143-215.8E Basinwide Water Quality Management Plans Session Laws S.L. 2019-86 (Amendment to G.S. §143-214.26) S.L. 2016-94 S.L. 2015-246 S.L. 2015-149 S.L. 2014-90 S.L. 2014-120 S.L. 2013-413 S.L. 2013-121 S.L. 2013-265 S.L. 2012-200 (Amendment to G.S. §143-214.23 and G.S. §143-215.1) S.L. 2011-343 (Amendment to G.S. §143-214.11) S.L. 2009- 337 (Amendment to G.S. §143-214.11) Updated August 11, 2020 Administrative Rules: 15A NCAC 02B .0202 Definitions 15A NCAC 02B .0223 Nutrient Sensitive Waters 15A NCAC 02B .0701 Nutrient Strategies Definitions 15A NCAC 02B .0703 Nutrient Offset Credit Trading 15A NCAC 02B .0295 Mitigation Program Requirements for Protection and Maintenance of Riparian Buffers Neuse River Basin Buffer and Neuse Nutrient Strategy Session Laws S.L. 2011-394 S.L. 1998-221 (Part I) S.L. 1995-572 Administrative Rules: 15A NCAC 02B .0610 15A NCAC 02B .0611 15A NCAC 02B .0612 15A NCAC 02B .0710 15A NCAC 02B .0711 15A NCAC 02B .0712 15A NCAC 02B .0713 15A NCAC 02B .0714 15A NCAC 02B .0715 Managing Activities within Riparian Buffers: Definitions Managing Activities within Riparian Buffers: Authorization Certificates Managing Activities within Riparian Buffers: Forest Harvesting Requirements Neuse Nutrient Strategy: Purpose and Scope Neuse Nutrient Strategy: Stormwater Neuse Nutrient Strategy: Agriculture Neuse Nutrient Strategy: Wastewater Discharge Requirements Protection and Maintenance of Existing Riparian Buffers Delegation of Authority for the Protection and Maintenance of Existing Riparian Buffers DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 ATTACHMENT B *Credits shown below are only for mitigation credits approved by the UMBI, BPDP, and As -Built. (Sponsor Name & Instrument Narne) (Parcel Name w/ HUC #) Buffer Credit Ledger Date Last Updated: DWR Bank Parcel Project #: Total Credits Released To Date: Sale/ Release Date Purchaser or % Credit Release Project w/ HUC # Credits Released/Available to Bank Credits Debited/Sold From Bank Buffer Credit Balance Gov't Requiring Square Feet Acres Square Feet Acres Square Feet Acres 1 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 ATTACHMENT B *Credits shown below are only for mitigation credits approved by the UMBI, BPDP, and As -Built. (sponsor name & Instrument name} (Parcel Name w/ HUC U) Nitrogen Credit Ledger Date Last Updated: DWR Bank Parcel Project It: Total Credits Released To Date. Sale/ Release Date Purchaser or % Credit Release Project w/ HUC # Credits Released/Available to Bank Credits Debited/Sold From Bank Nutrient Credit Balance Gov't Requiring Pounds of Nitrogen ft2 Pounds of Nitrogen ft2 Pounds of Nitrogen ft2 DocuSign Envelope ID: 1A16A748-C965-4ECA-945E-43EE022559B4 ATTACHMENT C Table 1. [INSERT PROJECT NAME], [INSERT PROJECT NUMBER], Project Credits Project Area N Credit Conversion Ratio (fta/pound) P Credit Conversion Ratio {ftx/paundj MN/A #N/A Credit Type Location Subject? (enter NO if ephemeral or diuh i) Feature Type Mitigation Activity Min -Max Buffer Width{ftl Feature Name Total Area (f[t} Total (Creditable) Area of Buffer Mitigation (fel Initial Credit Ratio{Ir:1lj is Full Credit Final Credit Ratip (x:1, Convertible to Riparian Buffer? Riparian Suffer Credits Convertibleto Nutrient Offset? Delivered Nutrient Offset: N [Ipsl Delivered Nutrient Offset; P{!bs} -- ON/A MN/A PN/A MN/A WN/A MN/A *N/A #N/A -- dN/A MN/A WN/A MN/A WN/A MN/A — IN/A #N/A — pN/A MN/A WN/A MN/A PN/A MN/A -- ON/A #N/A -- IN/A ieN/A WN/A MN/A WN/A MN/A -- uN/A #N/A — JN/A #N/A WN/A MN/A WN/A MN/A Totals Ifni: Total Buffer [ft2}: Total Nutrient Offset [ft2}: 0 0 0.000 pN/A *N/A 0 0 0 N/A Enter Preservation Credits Below Total Ephemeral Area Ift2}for Credit: Total Eligible Ephemeral Area (ft'}: Total Eligible for Preservation (ft1}: Credit Type Location Subject? Feature Type Mitigation Activity VeS horn, Yes I Epherru ral TOTAL AREA OF BUFFER MITIGATION (TA BM} Mitigation Totals Square Feet Credits Restoration: 0 0.090 Enhancement: 0 0.000 Preservation: ❑ 0.000 Total Riparian Buffer: 0 0.000 TOTAL NUTRIENT OFFSET MITIGATION Mitigation Totals Square Feet Credits Nutrient Offset. Nitrogen: 0 0-000 Phosphorus: 0-00❑ Min •Max Buffer Width (ftl 0-100 0. 100 Feature Name Preservation Area Subtotals Ift2}: 1- The Randleman Lake buffer rules allow some ditches to be classified as subject according to 35A NCAC ❑ZB .0250 (5)(4 0 0 0 001V/0! 0 0.0% Total Area (Sf) Total (Creditable, Area for Buffer Mitigation (WI 0 0 Ephemeral Reaches as % TA BM Preservation as % TA BM Initial Credit Ratio {x:l) % Full Credit Final Credit Ratio {x:11 Riparian Buffer Credits 10 100::,, 10 last updated GS/03/2020